'5 Billion Club' Kwak Sang-do Detention Hearing... Avoids Photo Line, Appears in Court

Former People Power Party lawmaker Gwak Sang-do Photo by Yonhap News

[Asia Economy Reporter Kim Daehyun] Former People Power Party lawmaker Kwak Sang-do, who became embroiled in controversy after his son received a large retirement payment from Hwacheon Daeyu Asset Management (Hwacheon Daeyu), appeared before the detention hearing on the 1st. Former lawmaker Kwak arrived at the court around 10:23 a.m. to attend the pre-trial detention hearing (detention warrant substantive examination). He avoided the photo line where reporters were waiting and entered through another court entrance, heading straight to the detention hearing courtroom.

His detention hearing began at 10:30 a.m. and is being presided over by Judge Seo Bomin, who is in charge of detention warrants at the Seoul Central District Court. Judge Seo is expected to listen to the prosecution and Kwak’s side, review the records, and decide on detention as early as late that night. Kwak is the first to have a detention warrant requested in connection with the so-called '50 Billion Club' allegations, which involve receiving or promising to receive money or valuables from Hwacheon Daeyu.

The prosecution believes that in the early stages of the Daejang-dong development project in 2015, when the Hana Bank consortium involving Hwacheon Daeyu was on the verge of collapse, Kwak exerted influence on Hana Financial Group at the request of Kim Man-bae, the major shareholder of Hwacheon Daeyu. However, since Kwak’s position at the time was chairman of the Korea Legal Aid Corporation, making it difficult for him to directly influence the Daejang-dong project, the prosecution’s main task is to prove what kind of assistance he provided in forming the consortium.

Additionally, the prosecution holds that Kwak’s son, Byung-chae, who worked at Hwacheon Daeyu for over six years, received about 2.5 billion won in retirement pay as a reward for such a favor. Although the initially paid retirement amount was reported to be 5 billion won, the amount stated in the warrant’s criminal facts is the net amount after tax deductions.

Former People Power Party lawmaker Kwak Sang-do, who is suspected of helping developers in Daejang-dong and receiving 5 billion won in money and goods through his son, appeared at a different entrance to avoid the press during the detention hearing at the Seoul Central District Court in Seocho-gu, Seoul, on the 1st. On that day, a ladder for the press was placed in front of the courthouse. Photo by Kim Hyun-min kimhyun81@

Earlier, the dedicated investigation team at the Seoul Central District Prosecutors’ Office (led by Deputy Chief Prosecutor Kim Tae-hoon) investigating the Daejang-dong lobbying allegations summoned Byung-chae twice for questioning. They also conducted raids on Kwak’s residence and office, as well as the Hana Bank headquarters. Subsequently, the investigation team summoned Kwak privately for questioning and on the 29th of last month requested a detention warrant against him on charges of bribery mediation under the Act on the Aggravated Punishment of Specific Economic Crimes.

The application of bribery mediation charges under the Specific Economic Crimes Act to Kwak is interpreted as due to the difficulty in proving bribery charges in this case. The third-party bribery crime is established when a public official receives a bribe related to their official duties, but since exerting influence related to Hana Bank is unrelated to his official duties, the prosecution shifted the charge accordingly. Bribery mediation under the Specific Economic Crimes Act is established when a third party mediates financial company business and receives or demands money or valuables.

Former lawmaker Kwak denied the allegations the day before, stating, "I have not done anything related to Hwacheon Daeyu and have not been involved in the Daejang-dong development project."